Frontier Airlines Needs New Partner As It Looks to Expand Regional Service

Kelly Yamanouchi On Sep 25, 2006
Source: The Denver Post

Sep. 21--As Frontier Airlines seeks to expand its regional service, it will need to find a new partner to replace Horizon Air.

That means passengers on Frontier's regional flights will fly on planes operated by a different regional carrier. Frontier announced earlier this month that it wants to grow the fleet of regional jets it uses from nine to as many as 20, but Horizon, its current Frontier JetExpress partner, decided not to bid.

Separately, Frontier Airlines shares closed at $8.41 Wednesday, up 8.5 percent, or 66 cents. The increase came after Merrill Lynch analyst Michael Linenberg raised his rating on Frontier shares to neutral from sell.

"While we believe the carrier will continue to face revenue pressure from increased competition in its Denver hub (which represents approximately 90 percent of Frontier's revenue base), we now think that this is likely to be offset by lower fuel prices," Linenberg said in a report.

Horizon now operates Frontier JetExpress flights including Denver to Calgary, Alberta; Boise, Idaho; Billings, Mont.; Fresno, Calif.; El Paso; Tulsa, Okla.; Oklahoma City; and Little Rock, Ark. It will pull its planes from the JetExpress operation starting in the first quarter of next year.

"We don't anticipate that there will be any disruption to our service to any of our cities," Frontier spokesman Joe Hodas said.

Last week, Frontier issued a request for proposals to Horizon and others for expanded regional jet operations.

Horizon said investment in additional aircraft "would compete for capital that could be invested in growing the Horizon Air/Alaska Airlines network," and it needs the aircraft it uses for JetExpress for its own network and growth. Horizon is a subsidiary of Alaska Air Group.

Frontier has already received responses to the RFP, but did not disclose who responded.